Raising Our Valuation of Carlsberg After Margins Expand in First Half

Carlsberg reported strong first-half results, with multiple revenue growth drivers combining to beat our forecasts. The margin performance was particularly impressive, with growth and operating leverage driving a comfortable beat to our forecasts and prompting management to raise full-year guidance. These results will probably stand out among Carlsberg's peer group for the ability to expand margins in this environment of rampant inflation. We are raising our fair value estimate to DKK 970 per share from DKK 910 to reflect the stronger-than-expected price/mix, as we suspect this may be able to continue. Nevertheless, after a strong run-up in the stock since March, we now believe Carlsberg is fairly valued.